Serbia country brief

General

Serbia is a country of 7.4 million (2011 est.) occupying 77,474 km² in the Western Balkans. It is bordered in the north by Hungary, to the east by Romania and Bulgaria, to the south by the former Yugoslav Republic of Macedonia and Kosovo, to the south-west by Montenegro, and to the west by Bosnia and Herzegovina and Croatia. The capital of Serbia is Belgrade.

Bilateral relations

The relationship between Australia and the Republic of Serbia has its basis in strong community links. In the 2011 Australian Census, 69,540 people identified themselves as having Serbian ancestry and 20,266 listed Serbia as their place of birth (the significant fall in numbers from 2006 appears to be the result of respondents who self-identified their ancestry as 'Yugoslav' being categorised by the ABS as 'Serbian' in the 2006 Census, but as 'South Eastern European' in the 2011 Census). Australia has maintained an embassy in Belgrade since 1967 and Serbia has an embassy in Canberra.

The value of Australia's merchandise trade with Serbia in 2011-12 was $19.5 million with the balance in Serbia's favour. Australian exports consisted primarily of specialised machinery and parts and hides and skins. The main imports were prepared or preserved fruit and vegetables, and electrical power machinery and parts. In March 2012 Serbia was granted concessional tariff rates on a range of goods under the Customs Tariff Act 1995.

Australia and Serbia initialled an air services agreement in September 2011. An MoU to combat international money-laundering was signed in February 2012.

An Australian Parliamentary delegation visited Serbia in October 2008. Ivica Dačić, then Serbian First Deputy Prime Minister and Minister of the Interior, visited Australia in February 2012.

Political Overview

The National Assembly of the Republic of Serbia is a 250-seat unicameral legislative body. Deputies are elected for four-year terms under a 'party list' system. The President of Serbia, currently Mr Tomislav Nikolić, is directly elected for a five-year term, and nominates the prime minister in consultation with the National Assembly. The President's role is largely ceremonial.

Serbia's most recent parliamentary and presidential elections were held concurrently on 6 May 2012. Presidential elections went to a second round of voting on May 20, with Tomislav Nikolić (49.76 per cent) of the Serbian Progressive Party eventually winning out over incumbent Boris Tadić (47.15 per cent) from the Democratic Party.

The parliamentary elections produced a tight result, split between the opposition Serbian Progressive Party (24.04 per cent), the incumbent coalition government led by the Democratic Party (22.11 per cent), and the Socialist Party of Serbia (14.53 per cent). After nearly two months of negotiation, a new coalition government led by Prime Minister Ivica Dačić (Socialist Party of Serbia) was sworn in on 27 July 2012. The coalition features representatives from across the political spectrum. The majority of Ministerial positions are filled by members of either the Serbian Progressive Party or Socialist Party. The conservative liberal party United Regions of Serbia (formally G17+) holds the key Finance and Economy portfolio. Career diplomat and former State Secretary of the Ministry of Foreign Affairs, Ivan Mrkić was nominated by the Progressive Party to serve as Foreign Minister. Other parties represented in the coalition include New Serbia and the Pensioners Party of Serbia.

The former state union of Serbia and Montenegro

Following the official dissolution of the Federal Republic of Yugoslavia in 2003, the Federal Parliament adopted a new Constitutional Charter proclaiming the establishment of the state of 'Serbia and Montenegro'. Under the terms of the 2003 Belgrade Agreement, both Serbia and Montenegro had the right to hold a referendum regarding their membership of the union. Montenegro held such a referendum on 21 May 2006. Official results showed a 55.5 per cent majority in favour of independence, a result narrowly exceeding the 55 per cent mandate required by the European Union for a change to be effected. Hence, the Montenegrin Parliament declared independence on 3 June 2006. The Serbian Parliament followed two days later and dissolved the state union of Serbia and Montenegro, declaring Serbia the successor state to the union. Australia acknowledges the Republic of Serbia as the continuing entity of the former state union, and officially recognised the independent state of the Republic of Montenegro on 27 June 2006.

Serbia and the Republic of Kosovo

On 17 February 2008, Kosovo, formerly an autonomous province within the Republic of Serbia, declared independence. Australia recognised the Republic of Kosovo as an independent state on 19 February 2008. To date, over 91 countries have recognised Kosovo's independence, including the United States, the United Kingdom, France and Germany. On 10 June 1999, Kosovo was placed under an interim international administration. The NATO-led Kosovo Force (KFOR) was made responsible for security and the United Nations Mission in Kosovo (UNMIK) given oversight of the establishment of provisional self-governing institutions. Their mandates were established by UN Security Council Resolution 1244. The EU rule of law mission (EULEX) supervises Kosovo's judicial and security apparatus.

On 10 September 2012 the International Steering Group (ISG) agreed to end supervised independence of Kosovo. At the beginning of July Kosovo's institutions adopted the necessary constitutional and legal amendments to end the supervised independence. This was coupled with a law extending EULEX's mandate until mid-2014.

On 9 September 2010, the UN General Assembly adopted a joint Serbian-EU resolution on Kosovo by consensus. The resolution acknowledged the July 2010 International Court of Justice advisory opinion (finding that the declaration of independence by Kosovo did not violate international law) and welcomed EU facilitation of dialogue between the parties. Serbia maintains that the resolution is a 'status neutral document' and does not equate to recognition of the unilateral independence of Kosovo. The 'Belgrade–Pristina Dialogue', which commenced in March 2011, focuses on issues of technical cooperation, such as regulating borders and customs, economic cooperation and joint initiatives against organised crime.

Progress towards European Union membership

Serbia submitted its formal bid for EU candidate status in December 2009. On 19 January 2011, the European Parliament ratified the EU Stabilisation and Association Agreement with Serbia, which establishes the framework for EU engagement with applicant countries. The EU granted Serbia official candidate status in March 2012.

In tandem with pursuit of its EU aspirations, Serbia has made substantial efforts to improve its regional relations. It has taken initiatives in what has been frequently characterised as 'reconciliation diplomacy', which, in addition to the 2010 Srebrenica Declaration (a Serbian parliamentary resolution condemning the 1995 massacres), include Serbia's compromise in agreeing to the joint EU-Serbia UNGA resolution on Kosovo; support for a regional commission to investigate atrocities in the period 1991-2001; and high-level visits to Croatia, Montenegro and Bosnia and Herzegovina.

Economic Overview

Serbia's post-Milosević economic progress was substantial prior to the global economic crisis. Driven primarily by Serbia's membership aspirations to the European Union (EU) and in the World Trade Organization (WTO), economic reform moved forward in many areas, but challenges remain. Privatization is far from complete and more than 31 per cent of the workforce is employed by state-owned enterprises or government. Unemployment, a lack of liquidity in the economy, corruption and labour unrest are central to continuing political and economic problems.

The global economic crisis caused Serbia's GDP growth to fall from 3.8 per cent in 2008 to -3.5 per cent in 2009. While 2010-11 saw the beginning of recovery, the crisis in the euro zone and Serbia's exposure to it through trade, investment and banking linkages have resulted in ongoing economic problems. The economy fell into recession in June 2012 after GDP growth plummeted to 0.1 per cent.

In September 2011, Serbia and the IMF reached an agreement giving Serbia access to up to one billion euros through a Stand-By Arrangement (SBA). The IMF stated the objectives of the agreement were three-fold: to insulate Serbia from external shocks, to promote tightening of fiscal policy and to improve the investment climate in the country. The IMF suspended the SBA in February 2012 due to loose budgetary policy and general non-compliance.

Inflation and price increases on controlled products and services, such as public transportation, electricity, and natural gas, have exacerbated the economic pressure on Serbians, whose average net incomes have stagnated. The official unemployment rate is estimated to be almost 28.3 per cent, but unofficially is much higher in the provinces and among women and minorities.

Updated October 2012